Bangkok--15 Nov--Standard & Poor's
U.S.-based asset manager Marsico Parent Co. LLC completed its previously announced debt restructuring this week. According to our criteria, we believe this constitutes a distressed exchange, so we revised our rating on Marsico to 'SD', which indicates selective default. This raises the year-to-date 2010 global corporate default tally to 74, said an article published today by Standard & Poor's, titled "Global Corporate Default Update (Nov. 5 - 11, 2010) (Premium)."
By region, the current year-to-date default tallies are 51 in the U.S., three in Europe, nine in the emerging markets, and 11 in the other developed region (Australia, Canada, Japan, and New Zealand).
"So far this year, missed interest or principal payments are responsible for 27 defaults and Chapter 11 and foreign bankruptcy filings account for 22," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research. "In addition, distressed exchanges account for 20 defaults, receiverships are responsible for three, and regulatory directives and administration account for one default each."
We expect that the default rate will continue to decline next year. Our baseline projection for the U.S. corporate speculative-grade default rate in the 12 months ending in September 2011 is 2.4% (35 defaults). We believe that this likely will be close to the trough for this cycle. Our alternative forecasts are 2.0% (29 defaults) at the optimistic end and 4.5% (66 defaults) at the pessimistic end. Our pessimistic scenario is the same as the long-term (1981 to 2009) average default rate and is a slight increase from the current level.
We base our forecasts on quantitative and qualitative factors that we consider, including, but not limited to, Standard & Poor's proprietary default model for the U.S. corporate speculative-grade bond market. We update our outlook for the U.S. issuer-based corporate speculative-grade default rate each quarter after analyzing the latest economic data and expectations.
This article is part of our premium Global Fixed Income Research content, which is available to premium subscribers to RatingsDirect on the Global Credit Portal at www.globalcreditportal.com and to RatingsDirect at www.ratingsdirect.com. Ratings information can also be found on Standard & Poor's public Web site by using the Ratings search box located in the left column at www.standardandpoors.com. Members of the media may request a copy of this report by contacting the media representative provided.
Media Contact:
Mimi Barker, New York (1) 212-438-5054,
[email protected]
Analyst Contact:
Diane Vazza, New York (1) 212-438-2760